Analys från DailyFX

DAX in Limbo, Looking to CAC 40 for Direction

Published

7 år ago

12 juni, 2017

DailyFX

What’s inside:

DAX been a difficult index to get a handle on in recent trade
Watching a couple of key technical developments in the index, but…
The CAC 40 may be the index to focus on given the nearly completed triangle

What’s driving European stocks? Find out in our market forecasts.

As we noted in the weekly forecast, the DAX hasn’t been a very easy index to get a handle on in the short-term. The 12700-line heading into last week was a short-term threshold viewed with importance – hold above bias remains bullish, close below and focus will shift lower. After briefly dipping below 12700 the market quickly recovered back above to keep the technical landscape intact, and choppy. Focus is now shifted towards the trend-line off the French election-day gap low as fairly important point of support. Should trend-line support break, next up is the November trend-line and May low at 12490. Aggressive selling could lead to an eventual test of the 4/24 gap. That is if it breaks (it’s support until it’s not). Should the market hold, then a neutral to bullish bias is warranted. The choppy nature of recent price action leaves us in overall limbo, and on that risk/reward isn’t favorable in either direction.

DAX: Daily

Keep an eye on the CAC 40. While typically the CAC is viewed secondary to the DAX as the latter is the larger market, we may find better directional indications in the former. The 3-month correlation between the two indices is 96%, and only has been as low as 43% in the past three years. It’s safe to say they trade together for the most part.

The French index has been in the process of carving out a solid-looking triangle. It’s leaning more descending than symmetrical, thus hinting at a possible bearish outcome, except that the trend has been strongly higher for months, which suggests the wedge may result in a continuation-move higher. The “well it could do this, or it could do that” thought is precisely why taking a ‘wait-and-see’ approach is best with these patterns. A convincing break higher above the upper trend-line puts longs into play, while a break below the lower trend-line brings shorts into focus; especially with the glaring first-round Election-gap around the corner. The November trend-line just below the 4/24 gap-day low stands in the way, but clear below there and there is room for the market to drop. Again, this is if we see a breakdown out of the triangle. On a top-side break we look for new highs above the May peak to take shape.

CAC 40: Daily

Paul conducts webinars every week from Tuesday-Friday. See the Webinar Calendar for details, and the full line-up of all upcoming live events.

—Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email by signing up here.

You can follow Paul on Twitter at @PaulRobinonFX.

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

7 år ago

30 september, 2017

DailyFX

What’s inside:

EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
Resistance in vicinity of 11825/80 likely to keep a lid on further strength
Targeting the low to mid-11600s with more selling

Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.

Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.

Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.

Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).

Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.

For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.

EURUSD: Daily

—Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email bysigning up here.

You can follow Paul on Twitter at@PaulRobinonFX.

Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

Published

7 år ago

29 september, 2017

DailyFX

Euro Bias Mixed Heading into October, Q4'17

Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.

EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Published

7 år ago

29 september, 2017

DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.

GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form